The ABCs of HCCs: Decoding CMS’s Hierarchical Condition Categories

In 2004 Medicare implemented an HCC (Hierarchical Condition Categories) model to adjust capitation payments to private health care plans for the health expenditure risk of their enrollees. The Centers for Medicare and Medicaid (CMS) Risk Adjustment Model measures the disease burden that includes 70 HCC categories, which are correlated to diagnosis codes.

CMS’ model is accumulative, meaning that a patient can have more than one HCC category assigned to them. Some categories override other categories and there is a hierarchy of categories.

The following HCCs reflect a few common chronic conditions found in the Medicare population, that Medicare Advantage Plans look for to be documented in a patient’s chart:

  • Diabetes without complications – HCC 19
  • Chronic Obstructive Pulmonary Disease – 108
  • Congestive Heart Failure – 80
  • Breast Cancer – 10
  • Ischemic Heart Disease – 92
  • Angina – 83

Diagnoses from the previous year are used to establish capitation payments to the MA plan. The HCC must be captured every 12 months for CMS to reimburse the MA plan, and if the HCC codes are captured outside of that scope of 12 months (for example, 12 months and 4 days), it will then generate a 6-month revenue gap for that MA plan.

It all boils down to the data collection process, which of course always points back to the physician’s office and the documentation of the patient encounter.

Physicians who do not exercise good documentation at each patient encounter with the chronically ill will receive fewer resources from health plans and will have less ability to grow.

Good documentation begins at the time of the patient’s face-to-face encounter with the physician. It means the physician documents the clinical findings in the medical record, and the medical record is used to determine ICD-9-CM codes. The pertinent information from the patient encounter is submitted to the MA organization for payment.

Guiding Principle:

  • The risk adjustment diagnosis must be based on clinical medical record documentation from a face-to-face encounter,
  • coded according to the ICD-9-CM Guidelines for Coding and Reporting; assigned based on dates of service within the data collection period,
  • submitted to the MA organization from an appropriate risk adjustment provider type and an appropriate risk adjustment physician data source.

In addition to the Guiding Principle, risk adjustment data validation guidelines include the following:

  • The medical record documentation must support an assigned HCC.
  • Beneficiary HCCs and risk adjustment records are selected based on risk adjustment diagnoses (ICD-9 codes),
  • Provider type,
  • Health Insurance Claim (HIC) number that is submitted to the Risk Adjustment Processing System (RAPS).

Medicare Advantage Plans have to submit the “one best medical record” that supports each beneficiary HCC identified for validation.

What does this mean?

The MA plan can choose to submit

  • a hospital inpatient,
  • hospital outpatient,
  • or physician medical record when more than one option is available.

Here is an example of good documentation:

Chief Complaint:

S: Voices no complaint except that she wishes she could visit her sister, who is hospitalized. States she is able to get around, including bathroom and cafeteria, without difficulty. Denies any pain or shortness of breath. No change in bowel or bladder habits.

O: Patient alert, oriented to person, disoriented to place and time. No acute distress.

Cardiac: RRR no rubs, gallops or murmurs noted

Lungs CTA bilat. No cough or wheezing noted.

Abd soft non tender to palpitation with Colostomy intact, skin dry and intact surrounding pink-red stoma, liquid brown feces.

Diminished sensation LE bilaterally, skin cool with rubor.

Old incision for L great toe amputation dry and intact. Able to ambulate to toilet and cafeteria with walker.

A: 250.70 Diabetes with peripheral circulatory disorders, currently controlled; with 443.81 peripheral vascular disease due to diabetes; and 250.60 diabetes with neurologic manifestations of 357.2 diabetic polyneuropathy.

Finger stick blood sugar ranges 125-175 in past 2 weeks. Diabetes controlled on current regimen a.c. & h.s. insulin; sliding scale insulin if needed. V55.3 Functioning colostomy, no change in plan of care.

V49.71 Old amputated L great toe – stable.

290.40 Mild senile dementia (see notes October 10, 2006)

733.13 Osteoporosis with vertebral fractures (see notes September 13, 2006).

P: Continue current diet & insulin regimen. Retain sliding scale order for prn with notification parameters. Continue current activity level.

Authenticated by: Any Physician, MD

Next Month I will explore more on HCC documentation and how to conduct a chart review

The following websites are great resources for HCC information:

American Health Information Management Association,

American Medical Association,$FIle/ra-resourceguide_120607.pdf

Holly J. Cassano has been certified for more than 4 years and has been involved in practice management, coding, auditing, teaching and consulting for multiple specialties for the past 14 years. She served two terms as an AAPC local chapter officer and has written several articles for The AAPC, She currently works for Preferred Care Partners as a CDI specialist, based out of The Villages, FL. You can reach her at [email protected].

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